May 27 (Reuters) - Euro zone government bond yields struggled for direction on Monday ahead of key economic data after rising last week as markets scaled back expectations for the European Central Bank (ECB) monetary easing.

Investors will focus on the German consumer price index on Wednesday, along with the euro area inflation figures, and the U.S. personal consumption expenditure index on Friday. The ECB's consumer expectations survey will be released on Tuesday, and the Federal Reserve's Beige Book on Wednesday.

Euro zone bond yields recorded their biggest rise in a month last week after solid economic data.

"Our economists broadly concur with the consensus that headline (euro area) inflation should tick up while the decline in core inflation is likely to stall," said Hauke Siemssen, rate strategist at Commerzbank.

"This outcome could add spice to the ECB's assessment that headline and core inflation dynamics are both decelerating."

Money markets last priced in 58 basis points (bps) of ECB monetary easing in 2024, which implies two rate cuts and an around 30% chance of a third move by year-end.

The ECB is ready to cut interest rates next month but policy must continue to be restrictive this year as wage growth will not normalise until 2026, ECB chief economist Philip Lane told the Financial Times.

Markets take for granted an ECB cut in June, analysts have said, but have also started discounting less than one cut every quarter, a move which derivatives have priced in for months.

Germany's two-year government bond yield, more sensitive to policy rate expectations, was flat at 3.09% after hitting 3.124% on Friday, its highest since mid-November.

Fed Governor Christopher Waller said on Friday that the so-called R-star - the rate that neither stimulates nor restricts the economy - keeping inflation at the central bank's target- could rise after years of declines.

Germany's 10-year yield, the bloc's benchmark, edged up slightly to 2.59%.

German business morale stagnated in May, falling short of a forecast improvement, according to a survey on Monday.

Italy's 10-year yield was up 0.5 bps at 3.89%, while the gap between Italian and German yields -- a gauge of the risk premium investors seek to hold bonds of the euro area's most indebted countries -- was at 129 bps.

The spread between U.S. 10-year Treasuries and German bunds -- a gauge of the expected policy path divergence between the ECB and the Fed -- tightened to 187.5 bps.

BofA economists expect the divergence between the ECB and the Fed monetary policy to be wider than the current market expectations and the spread between U.S. and German yields to break recent peaks by year-end.

(Reporting by Stefano Rebaudo; Editing by Sriraj Kalluvila)